Nonprofits report bountiful year

The Twin Cities’ largest civic and cultural nonprofits increased their combined revenue by 10 percent in fiscal 2011, according to an analysis of the Minneapolis/St. Paul Business Journal’s Top 25 lists published this week. But the fortunes of individual nonprofits vary greatly, largely based on their funding sources.

Maplewood-based Second Harvest Heartland, which distributes food donated by businesses and the government to hungry Minnesota families, achieved growth through funding diversity.

The nonprofit distributed 71 million pounds of food (worth a little more than $80 million) in 2011, compared to about 59 million pounds the year before, despite smaller food-manufacturer surpluses due to tighter supply chains and a 5 million-pound reduction from the federal government. Its revenue, which counts in-kind food donations, increased in fiscal year 2011 by almost 16 percent to $106 million.

“Finding innovative new sources of food was the only way we really understood how to grow,” Second Harvest CEO Rob Zeaske said.

One source has been Second Harvest’s retail rescue program, which collected about 18 million pounds of perishable food from grocery stores, double the amount collected the year before. The program is expanding to Kwik Trip Inc. convenience stores, and Second Harvest is considering similar programs for hotels and restaurants. The organization also is cultivating relationships with sweet corn, potato and pea farmers with more crops than they can sell.

Bigger is better for Second Harvest as demand continues to increase. The organization’s costs dropped from 21 cents per pound in fiscal 2010 to between 19 and 20 cents, said Chief Financial Officer Jane Hopkins Gould.

Second Harvest estimated it delivered about 7.5 percent more food in the recently ended fiscal year 2012.

Nonprofits ‘healthy and still growing’

Total revenue from the nonprofit organizations on the two Top 25 lists increased by 10 percent to $2.1 billion. Total revenue for the civic nonprofits increased by about 13 percent to $1.63 billion, while revenue for cultural nonprofits increased by 2 percent to $471.4 million.

The lists do not include health insurers or direct-service health care organizations (which are some of the largest nonprofits in Minnesota), and also exclude corporate and community foundations and educational institutions.

The Twin Cities nonprofit sector, which employs one in 10 metro workers, is healthy and still growing, said Jon Pratt, executive director of the Minnesota Council of Nonprofits.

The total number of nonprofits with employees has been on a slight decline since about 2008. Smaller nonprofits have more difficulty securing funds than larger nonprofits, but are holding their own, Pratt said.

Organizations that charge service fees (the largest source of revenue for nonprofits) can decide which services to offer and how to offer them, but are at the mercy of the market. Revenue from government funding is more predictable and reliable than fees or donations, but also more restrictive. Of the three main sources, donations are most closely tied to the economy.

The National Marrow Donor Program (NMDP), which gets most of its funding from fees charged for facilitating bone and marrow transplants, grew revenue by nearly 12 percent to $316.5 million in the last fiscal year. Dr. Jeffrey Chell, the Minneapolis-based organization’s chief executive, said continued demand for transplants fueled the growth in revenue, which made an additional 350 transplants possible.

NMDP will help with about 6,000 transplants this year, but Chell said domestic demand is double that and worldwide demand 20 times greater. To meet and further that demand, NMDP enlisted hundreds of thousands of potential transplant donors, recruited students to pursue transplant-related careers and encouraged health care providers to start or expand transplant programs.

“We were able to show them that there was a significant unmet need for transplant-related services. … They’ve been rewarded by having more business,” Chell said.

At Hennepin Theatre Trust, ticket sales drove a 77 percent revenue increase. Those sales are mostly linked to how many weeks of Broadway tours the Minneapolis theater group can book, like the six-week “Wicked” run in fiscal year 2011, spokeswoman Karen Nelson said in an email.

Big movers

The YMCA of the Greater Twin Cities became the third-largest nonprofit on the list after the merger of the YMCA of Metropolitan Minneapolis and YMCA of Greater St. Paul at the beginning of 2012. The two groups had about $90.7 million in combined revenue before the merger; the new entity reported $112.4 million in revenue after.

Revenue declined 65 percent to about $10.5 million at Artspace Projects Inc., a national real estate developer for artists and art organizations. That was the largest year-to-year drop of both lists, but Artspace spokeswoman Melodie Bahan said large year-to-year fluctuations aren’t unusual at the Minneapolis-based organization, which has 32 projects in operation.

“We’re in a very healthy state financially. … We’re actually in a period of pretty strong growth,” Bahan said.

Biggest nonprofit movers

Twenty-two Twin Cities nonprofit organizations posted double-digit revenue increases or decreases from fiscal year 2010 to fiscal year 2011; six of those changed by at least 20 percent: